On 11 December 2017, SEC Chairman Jay Clayton released a statement on cryptocurrencies and ICOs as a warning to potential investors to beware of scams and criminal activity in the sector.
This statement was released following charges brought by the SEC against PlexCorps, a Bitcoin alternative which falsely promised huge profits to thousands of investors. This was the first action taken by the SEC's new Cyber Unit, which was created in September 2017 to focus the Enforcement Division's expertise on misconduct involving cyber-based threats. The SEC released a statement on 4 December 2017, announcing that PlexCorps would be the first in a series of crackdowns against cryptocurrencies.
Chairman Clayton offered his views on the topic, warning both main street investors and market professionals of the risks associated with cryptocurrencies and ICOs. He emphasised that, while cryptocurrencies change the manner of financial trading, they do not change the legal basis for regulation, noting that not a single initial coin offering has been registered with the SEC. Citing the "21(a) Report," an investigative report released by the SEC earlier this year, he highlighted that many professionals are attempting to claim that their tokens or coins are not securities. However, according to Chairman Clayton, cryptocurrencies do generally implicate the securities registration requirements and other investor protection provisions under the Securities Exchange Act of 1934. Therefore, prudence and caution are advised when making investments in this sector in order to ensure that proper regulation and protection laws are complied with.
The SEC's statement can be found online at:
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